Ita/594/2009 Of Commissioner Of Income Tax,Kottayam v. M/S.mini Muthoot Mutual Funds Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON WEDNESDAY,THE 14TH DAY OF NOVEMBER 2018 / 23RD KARTHIKA, 1940 ITA.No. 594 of 2009 AGAINST THE ORDER/JUDGMENT IN ITA 470(COCH)/1999 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 19-08-2004 APPELLANT/S:/APPELLANT/REVENUE: COMMISSIONER OF INCOME TAX,KOTTAYAM. BY ADVS.SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES)SRI.JOSE JOSEPH SC FOR INCOME TAX RESPONDENT/S:/RESPONDENT/ASSESSEE: M/S.MINI MUTHOOT MUTUAL FUNDS LTD.,KOZHENCHERRY. BY ADVS.SRI.E.K.NANDAKUMAR (SR.)SRI.K.JOHN MATHAISRI.P.BENNY THOMASSRI.P.GOPINATH THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 14.11.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT K.Vinod Chandran, J. The question raised in the appeal as framed byanother Division Bench of this Court on 22.02.2010 is asfollows: “Whether on the facts and in thecircumstances of the case, and also inview of the fact that the Commissioner ofIncome-tax (Appeals) admitted the fixeddeposit register as a fresh evidencewithout giving an opportunity of beingheard to the Assessing Officer asprescribed under Rule 46A(3) of theIncome-tax Rules, the Tribunal is right inlaw, in upholding the finding ofCommissioner of Income-tax (Appeals) thatthe assessee maintained the fixed depositregister properly and is not the findingof the Commissioner of Income-tax(Appeals) and the confirmation of the sameby the Tribunal absolutely perverse,against natural justice and the order isnull and void?”2.The assessee is a Nidhi Company. For the assessment year 1996-97, the Assessing Officer (AO) noticed unsecured loans of Rs.6,49,15,063/- credited tothe balance-sheet. The assessee was directed to furnish the names and complete details including postal addressesof the persons from whom unsecured loans were received,the dates and mode of receipt of loans as also the manner in which the amounts were transferred. Notice as perthe assessment order, is dated 14.1.1999, which wasnot responded to. 3.Return was filed by the assessee on2.12.1996, which was processed under Section 143(1)on 29.12.1996. Scrutiny assessment was taken upcalling for details and explanations of the claimsmade in the return. The assessee is said to havesought an adjournment and later an application underSection 144A was also filed before the AdditionalCommissioner of Income Tax. The assessee wasdirected to furnish the details as sought for by theAO in the petition under Section 144A. None of theseopportunities were availed of and hence, theunsecured loans were made as an addition towardsincome. In first appeal, the assessee is said tohave produced some fixed deposit registers based onwhich the first appellate authority deleted theaddition made by the AO. The first appellateauthority found that notice under Section 143(2) was issued first on 27.12.1996, which is not spoken of inthe assessment order. On a verification of therecords, it was found that the matter was posted onmany dates and there was appearance of the authorisedrepresentative also. From the records, it was foundthat there was a noting by the AO that the records ofthe year 1996-97 were missing. The subsequentproceedings in which the assessee is said to have notresponded, was found to be after the records wentmissing. The first appellate authority entered afinding that, in fact, there is a reasonablepresumption of the assessee having produced recordsbefore the Assessing Officer, especially since theauthorised representative appeared before the AO onan assessment under the Interest Tax Act. 4.The assessee then furnished a list ofdeposits, a few of which were verified by the firstappellate authority. In fact, the first appellateauthority; on the assessee producing the records,ought to have remanded the matter to the AO. The 4.The assessee then furnished a list ofdeposits, a few of which were verified by the firstappellate authority. In fact, the first appellateauthority; on the assessee producing the records,ought to have remanded the matter to the AO. The -5- first appellate authority found that many of thedeposits were verified by the AO in the previous yearalso. It was also found that some of the depositswere revalidated in the present assessment year. Thedetails of certain depositors were extracted by thefirst appellate authority and it was found that thepayments were made by cheques. If the list ofdepositors were produced, as we noticed, it wouldhave been appropriate that the matter was remandedback to the AO itself. The verification said to havebeen done by the appellate authority is only aperusal of the list and not a verification of thegenuineness of such transactions. The details asentered in the list of cheque payments were alsotaken as true by the first appellate authority. Weare of the opinion that the first appellate authorityerred in having so deleted the addition on mereassumption based on surmises and conjectures; without actually verifying the genuineness of thetransactions. The Tribunal also relied on the findings of the CIT (Appeals) with respect to theverification done for the previous years. There isabsolutely no verification done as to how manydeposits of the previous year were revalidated in thepresent year. This is a permissible exercise by theAO, who has to do it at the first instance. In fact,the first appellate authority could also have donethe said exercise or at least called for a remandreport from the AO, which measure was not resortedto. In such circumstances, though after 22 years, weare constrained to remand the matter to the AO. Theassessee shall produce the list of depositors andprove their genuineness before the AO. In view ofthe above, the orders of the appellate authoritiesare set aside and the question of law is answered infavour of the Revenue and against the assessee. 5.The AO shall obtain the list from therecords of the first appellate authority or theassessee shall produce the same with necessarydetails to ascertain the genuineness of the depositors within a period of three months from thedate of receipt of certified copy of this judgment.We make it clear that nothing is expressed on themerits of the matter, since a decision has to betaken by the AO, after verification of thegenuineness of the records as above. The Income Tax Appeal is allowed. No costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON JUDGE jg ITA 594/09 -8- APPENDIX APPELLANT'S/S EXHIBITS: ANNEXURE ACOPY OF THE ORDER OF THE A.O.ANNEXURE BCOPY OF THE ORDER OF THE CIT (APPEALS). ANNEXURE CCOPY OF THE ORDER OF THE ITAT IN ITA NO.470/COCH/99 & CO NO.63/COCH/99 DATED 19.8.2004. jg [True Copy]